When the Olympics return to Athens this summer, Aramark (RMK) will make sure the athletes, coaches and officials are well fed. The third-largest food service provider in the world also works outside the spotlight, servicing such institutions as public and private schools, hospitals and prisons.

"Aramark's business isn't flashy," says Morningstar analyst Todd Lukasik, "but it is reliable and generates a fair amount of cash." The nature of Aramark's business doesn't require much operating investment, as the company's clients generally pay for the building upkeep at locations where it works. This means "most of its profit is converted into actual cash flow," says Lukasik.

The company benefits greatly from sheer economies of scale. Because of its market position, Aramark can buy food in bulk for a discount, giving it an edge over smaller competitors. A growing outsourcing trend and improving opportunities overseas are helping to drive growth.

The stock trades at 19 times earnings estimates of $1.44 per share for fiscal 2004 (ending in September). Analysts expect profits to grow 18% annually over the next few years.

--Erin Burt

MORE: Kiplinger.com | Investing | Markets | Column

TOOLS:   E-Mail Article  |  Print Article  |  Reprint Article  |  Content Sales

E-MAIL ALERTS: Keep up-to-date with the latest Kiplinger has to offer

SAVE, SHARE & DISCUSS:    |   |   |   |   |   |   |   |   

ADD HEADLINES: